Gross Domestic Product etc - 17

Income Approach GDP

2.37 GDP can also be obtained by adding together the income components
that make up value added. GDP by income approach covers only the incomes
generated within the domestic economy.

2.38 Components of value added: In principle, GDP can be computed by
adding together the components of value added and taxes less subsidies on
products. Value added includes:
(i) Compensation of employees: Compensation of employees is the
total remuneration in cash or in kind payable by employers to
employees for the work done. Direct social transfers from
employers to their employees or retired employees and their family,
such as payments for sickness, educational grants and pensions
that do not set up an independent fund, are also imputed to
compensation of employees;
(ii) Other taxes less subsidies on production: Other taxes less
subsidies on production are taxes payable by employers to carry
out production, irrespective of sales or profitability. They may be
payable as license fees or as taxes on the ownership or use of land,
buildings or other assets used in production or on the labour
employed or on the compensation of employees paid. They are not
taxes paid on values of sales or produced outputs, which are called
taxes on products;
(iii) Consumption of fixed capital: Consumption of fixed capital is the
cost of fixed assets used up in production in the accounting period;
(iv) Gross operating surplus: Gross operating surplus is the residual
obtained by deducting the above components from value added.

Thus gross operating surplus includes interest payable to lenders
of financial assets, or rent payable to rentiers of non-produced
assets, such as land and sub-soil assets.[Reproduced from CSO Publication]